Smt. Rekha Ramesh Nambiar, New Delhi V. ACIT, New Delhi

ITA 4441/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4131 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 16-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK GARG SENIOR
• Keywords: Question of law
• Section: 147; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.4441/DEL./2016 (ASSESSMENT YEAR : 2007-08) SMT. REKHA RAMESH NAMBIAR, VS. ACIT, CIRCLE 60 (1) , 4 F, POCKET 3, NEW DELHI. MAYUR VIHAR PHASE 1, NEW DELHI 110 091. (PAN : AAHPN0533A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAHUL KHARE, ADVOCATE REVENUE BY : SHRI DEEPAK GARG, SENIOR DR DATE OF HEARING : 28.09.2017 DATE OF ORDER : 12.10.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, SMT. REKHA RAMESH NAMBIAR (HEREINAFT ER REFERRED TO AS THE ASSESSEE), BY FILING THE PRESE NT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 03.06.2016 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-19, NEW DELHI QUA THE ASSESSMENT YEAR 2007-08 ON THE GROUNDS INTER ALIA T HAT :- 1. THE LEARNED CIT (A) ERRED IN FACT AND IN LAW CONFIRMING THE REOPENING U/S 148 WHICH IS NOT ONLY ILLEGAL BUT BAD IN LAW. ITA NO.4441/DEL./2016 2 2. THE LEARNED CIT (A) ERRED IN FACT AND IN LAW IN CONFIRMING THE ADDITION OF RS.31,00,000 WHICH IS NOT ONLY BAD IN LAW BUT ALSO AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE : ON THE BASIS OF INFORMATI ON RECEIVED FROM CBI ANTI CORRUPTION BRANCH, NEW DELHI THAT THE CASE HAS BEEN REGISTERED AGAINST RAMESH NAMBIAR, REGIONAL HEAD OF SPORTS (AIR INDIA) AND JS, SPORTS PROMOTION BOARD, SAFDARJUNG A IRPORT, NEW DELHI AND OTHERS UNDER SECTION 13 (2) READ WITH SE CTION 13(1)(E) OF PC ACT AND SECTION 109 OF THE IPC AND DURING INVEST IGATION, IT HAS COME ON RECORD THAT REKHA NAMBIAR, WIFE OF RAMESH N AMBIAR HAS PURCHASED 2450 SHARES WORTH RS.31,00,000/- OF M/S. HYT INNOVATIVE PRIVATE LIMITED DURING 2006 VIDE SHARE P URCHASE APPLICATION DATED 01.10.2006. AO ALSO NOTICED THAT THE SAID AMOUNT OF RS.31,00,000/- WAS ALREADY PENDING WITH M /S. HYT ENGINEER CO. LIMITED, ANOTHER ENTITY OF HYT GROUP O F COMPANIES HAVING PAID BY HER FATHER, SHRI GOPALAN RADHAKRISHN AN. AO, BEING SATISFIED THAT INCOME HAS ESCAPED ASSESSMENT, ISSUE D NOTICE DATED 28.03.2014 U/S 148 OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) AND THEREAFTER ISSUED NOTICE U/S 143 (2) AND 142 (1) WERE ISSUED AND IN RESPONSE THERETO, ASSESSEE APPEARED T HROUGH SHRI ITA NO.4441/DEL./2016 3 NEERAJ KUMAR CHAUBEY, AR FROM TIME TO TIME AND FURN ISHED DETAILS/ INFORMATION/ EVIDENCES. 3. ASSESSEE CALLED UPON TO FURNISH DETAILS REGARDIN G 2450 SHARES OF M/S. HYT INNOVATIVE PRIVATE LIMITED. BEI NG DISSATISFIED WITH THE EXPLANATION FURNISHED BY THE ASSESSEE, AO PROCEEDED TO CONCLUDE THAT THE ASSESSEE HAS FAILED TO SUBSTANTIA TE AS TO WHY HER FATHER PURCHASED THE SHARES IN HER NAME WHEN SHE WA S NOT LEGAL HEIR OF LATE SHRI GOPALAN RADHAKRISHNAN AND THUS MA DE PAYMENT THROUGH UNDISCLOSED SOURCES WHICH IS HIT BY SECTION 69 OF THE ACT AND THEREBY MADE AN ADDITION OF RS.31,00,000/-. 4. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EAL BEFORE THE LD. CIT (A) WHO HAS DISMISSED THE APPEAL. FEEL ING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF CHALLENGING THE IMPUGNED ORDER PASSED BY LD. CIT (A ) . 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE FIRST CONTENTION RAISED BY LD. AR FOR THE AS SESSEE CHALLENGING THE IMPUGNED ORDER IS THAT THE REOPENIN G IN THIS CASE IS BARRED BY LIMITATION. UNDISPUTEDLY, IN THE PRESENT CASE, ASSESSMENT YEAR ENDED ON 31.03.2007 WHEREAS NOTICE WAS ISSUED ON ITA NO.4441/DEL./2016 4 28.03.2014 WHICH IS AFTER A PERIOD OF FOUR YEARS. THE SECOND CONDITION FOR REOPENING AS CONTENDED BY LD. AR IS T HAT THE NOTICE ISSUED IN THIS CASE U/S 148 IS WITHOUT THE SATISFAC TION RECORDED BY PR.CHIEF COMMISSIONER, CHIEF COMMISSIONER, PR. COMM ISSIONER OR COMMISSIONER ON THE REASONS RECORDED BY THE AO THAT IT IS A FIT CASE OF ISSUANCE OF SUCH NOTICE WHEREAS SATISFACTIO N IS RECORDED BY JOINT COMMISSIONER OF INCOME-TAX AS IS APPARENT FRO M THE APPROVAL ACCORDED BY JCIT, COPY OF WHICH IS AVAILABLE AT PAG E 2 OF THE PAPER BOOK. 7. HOWEVER, LD. DR FOR THE REVENUE DREW OUR ATTENTI ON TOWARDS PROVISIONS CONTAINED U/S 151 (2) OF THE ACT AND CON TENDED THAT IN THE INSTANT CASE, AS PER FINANCE ACT, 2015, SATISFA CTION OF JCIT IS A VALID SATISFACTION TO ISSUE THE NOTICE. HOWEVER, W E ARE UNABLE TO AGREE WITH THE CONTENTION RAISED BY THE LD. DR FOR THE REVENUE BECAUSE FINANCE ACT, 2015 CAME INTO OPERATION W.E.F . 01.06.2015 WHEREAS NOTICE IN THIS CASE WAS ISSUED IN 2014 AND IN THAT CASE, NOTICE HAS TO BE ISSUED ONLY ON THE SATISFACTION OF THE COMMISSIONER OF INCOME-TAX THAT IT IS A FIT CASE FO R ISSUANCE OF SUCH NOTICE. 8. BE THAT AS IT MAY, EVEN THE JOINT COMMISSIONER O F INCOME- TAX HAS NOT APPLIED HIS MIND WHILE ACCORDING THE AP PROVAL RATHER MERELY WRITTEN THE WORD APPROVED IN A MECHANICAL MANNER. SO, ITA NO.4441/DEL./2016 5 MERELY PUTTING SIGNATURES BY CIT / JCIT CANNOT AND WILL NOT AMOUNT TO RECORDING OF SATISFACTION. 9. HONBLE JURISDICTIONAL HIGH COURT UPHELD THE DEC ISION RENDERED BY COORDINATE BENCH OF THE TRIBUNAL IN CIT VS. AMAR KHOSLA IN ITA NO.133/2014 DATED 20.07.2016 BY MAKING FOLLOWING OBSERVATIONS :- 3. MR. SAHNI THE LD. COUNSEL FOR THE APPELLANT, CO ULD NOT DISPUTE THAT FACTUALLY THE LD. CIT HAD MERELY A FFIXED HIS SIGNATURE ON THE NOTE OF THE ACIT FORWARDED TO HIM. CERTAINLY, THIS WAS NOT IN CONFORMITY WITH THE MANDATORY LEGAL REQUIREMENT EXPLAINED BY THIS CUR T IN SEVERAL DECISIONS INCLUDING UNITED ELECTRICAL CO. ( P) LTD. VS. CIT [2002] 258 ITR 317. 4. CONSEQUENTLY, NOTWITHSTANDING THAT THE RESPONDENTS FATHER-IN-LAW TEJ MOHAN SACHDEVA WHOSE APPEAL WAS ALSO CONSIDERED BY THE COMMON ORDER OF T HE ITAT IS TO BE LISTED BEFORE THE COURT, THE COURT IS NOT PERSUADED TO TAKE UP THIS CASE AT SUCH TIME THE SAI D APPEAL IS TAKEN UP. ON FACTS, THE COURT IS SATISFI ED THAT THE DECISION OF THE ITAT QUA THE RESPONDENT ASSESSE E IS CONSISTENT WITH THE SETTLED LEGAL POSITION AND NO SUBSTANTIAL QUESTION OF LAW ARISES FOR DETERMINATIO N BY THE COURT. 10. HONBLE HIGH COURT IN CASE CITED AS UNITED ELEC TRIC CO. P. LTD. VS. CIT & ORS. 258 ITR 317 ALSO DEALT WITH T HE IDENTICAL ISSUE ON APPLICATION OF MIND BY APPROVING AUTHORITY BY MAKING FOLLOWING OBSERVATIONS :- 'WHAT DISTURBS US MORE IS THAT EVEN THE ADDITIONAL COMMISSIONER HAS ACCORDED IS APPROVAL FOR ACTION U/ S 147 MECHANICALLY. WE FEEL THAT IF THE ADDITIONAL ITA NO.4441/DEL./2016 6 COMMISSIONER HAD CARED TO GO THROUGH THE STATEMENT OF THE SAID V.K.JAIN, PERHAPS HE WOULD NOT HAVE GRANTE D HIS APPROVAL, WHICH WAS MANDATORY IN TERMS OF THE PROVISO TO SUB SECTION (1) OF SECTION 151 OF THE AC T AS THE ACTION U/S 147 WAS BEING INITIATED AFTER THE EX PIRY OFF OUR YEARS FROM THE END OF THE RELEVANT ASSESSME NT YEAR. AS HIGHLIGHTED ABOVE, THE LEGISLATURE HAS PROVIDED CERTAIN SAFEGUARDS TO PREVENT ARBITRARY EXERCISE OF POWERS BY AN ASSESSING OFFICER, PARTICU LARLY AFTER A LAPSE OF SUBSTANTIAL TIME FROM COMPLETION O F ASSESSMENT. THE POWER VESTED IN THE COMMISSIONER TO GRANT OR NOT TO GRANT APPROVAL IS COUPLED WITH A DU TY. THE COMMISSIONER IS REQUIRED TO APPLY HIS MIND TO T HE PROPOSAL PUT UP TO HIM FOR APPROVAL IN THE LIGHT OF THE MATERIAL RELIED UPON BY THE ASSESSING OFFICER. THE SAID POWER CANNOT BE EXERCISED CASUALLY AND IN A ROUTINE MANNER. WE ARE CONSTRAINED TO OBSERVE THAT IN THE PRESENT CASE THERE HAS BEEN NO APPLICATION OF MIND BY THE ADDITIONAL COMMISSIONER BEFORE GRANTING THE APPROVAL. 11. SO, WE ARE OF THE CONSIDERED VIEW THAT IN THE I NSTANT CASE, NOTICE ISSUED BY THE AO U/S 148 OF THE ACT AND CONS EQUENT ASSESSMENT ORDER U/S 143 (3) READ WITH SECTION 147 OF THE ACT IS NOT SUSTAINABLE HAVING BEEN PASSED ON THE BASIS OF MECH ANICAL SANCTION GIVEN BY JCIT WITHOUT APPLYING THEIR MIND. 12. FURTHERMORE, THE ASSESSMENT WAS REOPENED IN THI S CASE MERELY ON THE BASIS OF THE CBI CASE REGISTERED AGAI NST RAMESH NAMBIAR, HUSBAND OF THE ASSESSEE AND OTHERS WHEREIN ASSESSEE ALONG WITH OTHERS WERE CHARGE SHEETED. HOWEVER, CH ARGE SHEET HAS BEEN QUASHED BY HONBLE HIGH COURT OF DELHI VIDE ORDER DATED 04.11.2015 PASSED IN WP (CRL.) 1432/2014 , COPY OF ORDER IS ITA NO.4441/DEL./2016 7 AVAILABLE AT PAGES 27 TO 35 OF THE PAPER BOOK. THE SAID JUDGMENT RENDERED BY HONBLE HIGH COURT HAS BEEN AFFIRMED BY HONBLE SUPREME COURT VIDE ORDER DATED 26.07.2017 , COPY OF ORDER IS AVAILABLE AT PAGES 51 & 52 OF THE PAPER BOOK. SO, MERELY PROCEEDING AGAINST THE ASSESSEE ON THE BASIS OF CBI CASE WITHOUT RECORDING SATISFACTION BY THE APPROVING AUTHORITY I S NOT PERMISSIBLE UNDER LAW. 13. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT REOPENING U/S 147 / 148 IN THI S CASE AND CONSEQUENT ASSESSMENT MADE U/S 143 (3) / 147 OF THE ACT IS BAD IN LAW, HENCE HEREBY QUASHED WITHOUT GOING INTO THE ME RITS OF THE CASE. CONSEQUENTLY, APPEAL FILED BY THE ASSESSEE I S HEREBY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 12 TH DAY OF OCTOBER, 2017. SD/- SD/- (N.K. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 12 TH DAY OF OCTOBER, 2017 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-19, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.